KARACHI, Oct 19: Hub Power Company Limited (Hubco) on Thursday unfolded a letter from the parent company -— International Power (NPIBV) -— expressing intention of converting/dematerialising the remaining balance of its shares into Central Depository Company (CDC).
The shares that International Power still holds in physical form and which are now to be converted into CDC stand at 181.7 million. Equity traders said that National Power International Holding B.V, which had held 239.7m shares (20.7 per cent of all outstanding shares) three years ago, had dematerialised 58 million shares on September 16, 2003.
“Now that IP intends converting the balance of 181.7 million (15.7 per cent) physical shares through Members’ Register, all of its shares would be dematerialized.” The International Power’s letter directed by Regional Managing Director, Asia, Vince R. Harris, to his successor CEO at Hubco in Karachi Javed Mahmood affirmed: “This will mean its total shareholding of 202 million Hubco shares will then be held in dematerialised form,” and added: “I understand under Article 16.5.2 of the Implementation Agreement that you will be informing the government of Pakistan of this.”
The regional chief for Asia further states: “I confirm that the minimum lock-in for NPIHBV of 44.4 million shares in accordance with the Implementation Agreement — Schedule 6 — Agreement with initial shareholders’ Clause 1.1.1(f) and Article 19(f) of the Company’s Articles of Association remains applicable.”
According to equity traders, the news was negatively received by the stock market, where the share in Hubco fell by Re0.55 to close at Rs26.20 on a volume of just about a million shares. That was suggestive on the third consecutive day of a relentless bull-run at the Karachi Stock Exchange, which saw the index close at a high of 11,567 points.
Analysts said that the reason for investors to grant a cool reception to Hubco’s intimation was that the 58 plus the 182 million shares that the parent company would convert into electronic form, worked out at 20.7 per cent of the 1,157 total outstanding shares in Hubco.
“Many investors translated the letter to mean that the parent company was taking the first step to sell those shares in the market,” stated one analyst, adding that traders felt that such unloading could considerably increase the floating stock and depress stock price.
Some analysts believed that the fear that the parent company would eventually be opting out of the Hubco equity, was unfounded. And the International Power’s letter supported that view: “I would like to take this opportunity of reiterating our commitment to Pakistan both in terms of our equity investment in the country, and in relation to the operation of the various power plants in which we have invested.”
Earlier last month, Hubco -- the 1,200mw Pakistan’s biggest independent power plant (IPP) -- foiled a hostile takeover bid by the local shareholders, when the majority of the 12 seats under contest on the 19-member board of directors were secured by the overseas parents.
“The International Power’s decision to cut down its holding now will mean that even if holds a token equity, its nominees will still be in majority on the Hubco board for three years until the next elections are due,” muses a stock strategist.
